Percentage-of-Assets or Flat Fee? How to Explain Your Fee Model Without Sounding Defensive

09 October 2026·6 min read

Quick answer: Neither fee model is objectively better — percentage-of-assets scales naturally with a client's portfolio and aligns your incentives with their growth, while flat fee is predictable and transparent regardless of balance. The way you explain the choice matters more than which one you pick, because clients aren't actually comparing numbers, they're checking whether you're being straight with them about how you get paid. A simple side-by-side framed around what each model means for them, not what it means for your revenue, removes the defensiveness entirely. 📈

There's a particular tone that creeps into a planner's voice when the fee conversation comes up — slightly rehearsed, slightly braced for pushback. Understandable, because fees are the one part of the relationship where it can feel like you're asking something of the client rather than giving them something. But clients can hear that defensiveness, and it makes them more suspicious, not less. 💖 The fix isn't a better justification. It's a clearer explanation.

What most firms get wrong

Most firms either avoid explaining their fee model until the client asks directly, or over-explain it with so much qualification and caveat that it sounds like they're apologising for charging anything at all. Both approaches create the exact suspicion they're trying to avoid. Clients don't need you to justify that you charge fees — everyone expects that. What they need is a plain, early explanation of how your model works and why it suits their situation, delivered with the same even tone you'd use to explain anything else about the engagement.

The other common mistake is treating the fee conversation as one-size-fits-all when the right model genuinely does depend on the client. A young professional building a modest portfolio and a retiree with a multi-million dollar SMSF don't experience percentage-of-assets the same way — pretending otherwise, or defaulting to whichever model is easier for your business, is where the defensiveness creeps back in.

Website copy template — Our fee model, explained:

H2: How we charge, and why

We believe you should understand exactly how we're paid before you decide to work with us. Depending on your situation, we offer [percentage-of-assets / flat fee / both], and we'll walk you through what that looks like for your specific circumstances before any agreement is signed.

Percentage-of-assets: You pay a set percentage of the assets we manage or advise on each year. This means our fee moves with the value of your portfolio — it's a model many clients find aligns naturally with the size and complexity of what we're managing. It's generally better suited to clients with larger, growing portfolios where ongoing investment management is a core part of the relationship.

Flat fee: You pay a fixed amount, agreed in advance, regardless of your portfolio's value or performance. This gives you certainty about cost and can suit clients who want advice on a defined scope — such as a one-off strategy review or retirement plan — without an ongoing percentage-based arrangement.

What we won't do: We won't recommend a model, product or strategy because it benefits our fee over your outcome. Our obligations under the best interests duty mean our advice has to be right for you first — the fee structure is a separate conversation from the advice itself, and we're happy to walk through both in detail, including your Fee Disclosure Statement, before you commit to anything.

General information only — this page describes how our fee models generally work and does not constitute a quote, a guarantee of investment performance, or personal financial advice. Your actual fees will be set out in writing and agreed with you directly, in line with our Fee Disclosure Statement obligations.

Growing portfolio, mid-career client: Portfolio valued at $650,000 and expected to grow steadily through regular contributions. Percentage-of-assets was explained as scaling with their investment management needs over time, with a worked example showing the dollar fee at their current balance — so there were no surprises about what the percentage translated to in real terms.

One-off retirement strategy client: Wanted a single comprehensive plan, not ongoing portfolio management. Flat fee was framed as matching the defined, one-time scope of the engagement — the client paid for the strategy work itself, not for assets under management they weren't asking the firm to manage.

High-balance SMSF trustee comparing two firms: Already had quotes using both models from different advisers and was wary of being sold on whichever suited the firm. The side-by-side dollar comparison at their actual balance, alongside a plain statement of what each model does and doesn't include, let them make the comparison themselves rather than feeling persuaded.

How to actually do this

Put the fee explanation on its own page, link to it from your "working with us" or "getting started" pages, and raise it again verbally at the discovery stage before any paid engagement begins — repetition here builds trust, it doesn't create annoyance. Where possible, show a worked dollar example at a realistic balance rather than leaving the percentage abstract; "0.8% per year" means very little until someone sees it next to their actual number. Keep the language even-handed between the two models — if your copy subtly talks up one and hedges on the other, clients notice, and it reads exactly like the defensiveness you're trying to avoid.

💡 The honest trade-off: a transparent fee page won't convert a client who's fundamentally fee-sensitive and shopping on price alone — some prospects will always choose the cheaper option regardless of how clearly you explain value. What it does do is filter out the clients who were never going to be a good fit, and build stronger trust with the ones who are.

Don't frame either model as universally "better" — it depends on the client's situation, and saying otherwise invites scepticism.
Don't use vague percentage language without a worked dollar example — abstractions read as evasive.
Don't imply a percentage-of-assets fee tracks or guarantees performance — it doesn't, and suggesting otherwise is a compliance risk.
Don't skip the Fee Disclosure Statement reference — leaving it out looks like you're hoping clients won't ask.

Frequently asked questions

Can we recommend one fee model over the other on our website?

You can explain which clients each model tends to suit, but avoid language that pushes every reader toward the model that happens to generate more revenue for your firm — the explanation should help the client self-select, not steer them.

Do we need to mention the best interests duty explicitly on this page?

It's good practice to reference it, since it reassures clients the fee structure and the advice itself are separate decisions — but the specific wording should be checked against your AFSL's compliance requirements.

Is percentage-of-assets actually more expensive for clients with larger portfolios?

It can be, in raw dollar terms, compared to a flat fee for similar scope of work — that's a genuine trade-off worth being upfront about rather than glossing over, since a client with a very large portfolio may be better served by a flat or capped arrangement.

Should we show real client numbers in the worked example?

No — use a realistic but hypothetical figure and say so clearly, both for client privacy and because real client fee data shouldn't appear in public marketing material.

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Written by

Kate, founder of Chronically Online

I help Gold Coast and Brisbane businesses grow with branding, websites and marketing that actually works.

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